The railroad also projects a 16 percent reduction in the number of overtime hours worked. Through July, LIRR employees worked 201,000 fewer overtime hours than during the same period last year.

The latest overtime projection includes costs related to last month's switching system fire in Jamaica and additional expenses resulting from recent staff and service cuts, an agency spokesman said. On Saturday, Newsday reported preliminary findings by the LIRR that the Jamaica fire caused $1.1 million in labor and related costs such as overtime.

"The Long Island Rail Road has been working aggressively to reduce its overtime costs," LIRR president Helena Williams said Friday. "We've used a number of methods to tighten our own internal controls, our use of unscheduled overtime and scheduled overtime, and we've had some success in reducing those overtime costs."

The projected reductions come amid increased scrutiny of LIRR overtime expenses. In August, State Comptroller Thomas DiNapoli said in an audit that the LIRR had the highest overtime costs of any Metropolitan Transportation Authority agency. DiNapoli also said last month he was conducting a forensic audit of MTA overtime expenses. The MTA is predicting a budget gap of around $900 million for its entire operation.

LIRR officials attributed the overtime drop to an aggressive watchdog strategy. Among the tactics being used are better enforcement against unnecessary sick leave, adjustment of scheduled shifts to maximize productivity, and targeting of the highest overtime earners, who may be looking to increase the size of their pension benefits in their final years on the job, LIRR officials said.

The LIRR also has focused on specific locations in each department where overtime is highest.

LIRR officials attributed much of their success to the agency's overtime task force, created in 2008, which meets regularly to come up with strategies to bring down overtime costs and review progress.

But Anthony Simon, general chairman of the United Transportation Union, the LIRR's largest union, said Sunday he was amazed the railroad was reporting any overtime savings in light of service cuts announced Sept. 13. The LIRR's transportation department has paid an average of 50 employees a day overtime to work on their days off, said Simon in a statement to Newsday.

An LIRR official who asked not to be identified acknowledged that overtime hours take time to settle down after scheduling changes. The agency, he said, factored that into its projection.

Maureen Michaels, head of the LIRR Commuter Council, said Sunday she believed the LIRR was trying to do something about overtime costs. But she also was concerned about the effect of staff cuts on service.

LIRR officials said overtime costs also were down in 2009, a 5.3 percent drop as compared with 2008.